In its March 2025 meeting, the Bank of Jamaica (BOJ) made a strategic decision to keep the policy rate unchanged at 6%, signaling confidence in the country’s improved inflation dynamics. Despite this stability, the BOJ emphasized that it stands ready to act swiftly if inflationary pressures threaten to derail the progress made so far.
“The committee reaffirmed its commitment to ensuring inflation remains low and stable, and will not hesitate to take necessary action should inflation rise beyond the target,” stated the BOJ in its official release.
Additionally, the central bank took steps to ease liquidity conditions in the banking sector by lowering the interest rate on its Standing Liquidity Facility (SLF) from 8% to 7%, effective March 28, 2025. This move is designed to enhance stability in short-term market rates and strengthen the flow of credit across the financial system.
The SLF provides overnight funding to banks dealing with temporary cash shortages, and the reduction in its rate aims to lower borrowing costs for financial institutions. By easing liquidity pressures, the BOJ expects banks to extend more credit to businesses and consumers, stimulating economic activity without jeopardizing its goal of controlling inflation.
Inflation in Jamaica has been on a positive trajectory. As of February 2025, the headline inflation rate dropped to 4.4%, down from 6.2% in the previous year, with core inflation maintaining a steady rate of 3.8% for the 20th consecutive month. These developments reflect positive trends, including favorable exchange rates and falling global commodity prices.
However, the BOJ remains cautious about external risks, such as shifts in global trade policies and economic policies in Jamaica’s major trading partners. Any disruptions in these areas could affect imported inflation and disrupt the gains made thus far.
While confident in the country’s progress, the BOJ made it clear that it will continue to closely monitor international developments. In the event of any inflationary shifts or external shocks, the central bank is prepared to implement additional measures to safeguard Jamaica’s economic stability. The next monetary policy review is set for May 2025, where further actions could be considered based on the evolving landscape.
